December 21, 2008

Has anybody noticed how out of date Obama's automobile industry rhetoric is? He's still talking about cars as if gas was over $4 per gallon and global warming was the imminent threat, rather than global depression. He keeps talking about how Detroit has to stop making big pickup trucks and start making little runabouts. That kind of mindless rhetoric is killing Detroit, which makes profits on big hulks and loses money on go-karts.

If Obama wants the Detroit car companies to actually earn some cash flow and keep workers employed over the next 2-3 years, then the government should take major steps to solve consumers' big worries about buying from the (not-so) Big Three:

1. Figure out a way to guarantee Detroit's seven year warranties so even if they go out of business, new buyers can still get the cars serviced under warranty. They'll be a lot less likely to go out of business if customers don't have to worry about them going out of business.

2. Guarantee that new buyers won't pay gas prices over, say, $2.75 per gallon during the next 2 or 3 years, through a tax rebate or whatever.

3. The President of the United States of America should stop demonizing the most profitable products made by American car companies. Stop pretending that "green" cars are going to rescue Detroit. Admit that all the SWPL green stuff was just a load of campaign hooey that is now "inoperative."

If the government can lift those clouds of uncertainty from would-be customers minds, then Detroit could move a lot of metal.

But, Obama won't becaus:

A. This is all about the class struggle.

B. Obama loves power. Helping American businesses and consumers make mutually satisfactory transactions is not as much fun for him as forcing both of them to make and (not) buy cars that they (and, for that matter, Obama himself, whose last car weighed 4,000 pounds) don't want.

31 comments:

The government could easily guarantee $2.75 gas prices for the next few years (and make a profit in the process) by buying up physical oil at a rate of ~2 million barrels per day (not so much that it would move the market under current circumstances) at prices below $40 per barrel, and agreeing to sell it to domestic refiners for no more than $60 per barrel within the next 3 years.

Regarding Obama's big car, he had a giant SUV when the last election cycle started that he traveled around from town to town chatting up little old white ladies.

Part of his pitch according to the local papers was "we-have-to-stop-building-gas-hogs-and-start economizing".

A local paper questioned the incongruence, and called Obama's campaign for comment.

After a few days, a spokesman responded, noting that Obama's SUV was a "green" vehicle, adapted for dual fuel (either gas or 85% ethanol - aka "E85") and therefore Obama was really "green" deep down inside.

Unfortunately, someone pointed out that there were no gas stations in Chicago selling E85 fuel and only 600 stations did so nationwide, as opposed to 170,000 regular gas stations.

Of course this revelation was probably more beneficial to Obama than damaging.

How? By exposing Obama's shameless "green" whiter people status seeking, millions of whiter people were reassured at a stroke that Obama was a card-carrying SWPL and therefore could be trusted.

I thought Detroit was actually in trouble because when gas was $4 per gallon, people were buying smaller and more economical Japanese cars?

That was the SWPLs who were doing that, like buying Priuses like crazy regardless of the environmental cost of those batteries and now they must be really pissed that the price of gas is so low and looks to stay low for years and a $7,000 battery replacement is looming, and no one would offer them a good trade-in on a car that needs $7,000 of repairs.

The really funny thing is that with the price of Oil being so low, even the Chinese are going to start buying big gas guzzling cars and jump-start China's car industry.

Guess what? The sun's going to burn out someday too!! Since eco-nazis have been predicting that oil is going to run out within a few years for more than 3 DECADES no one in their right mind is going to plan on it running out quickly enough to be a problem.

Detroit could make money on small cars if the American people were willing to, or forced to, pay a fair price for a well built small car-which costs just as much to build, essentially, as a well built big car.

My family drives nothing but Lincoln Town Cars and Ford Crown Vics(a/k/a Mercury Gran Marq). Our theory is that because Wall Streeters ride in Town Cars, Ford puts "the good stuff" in them. These cars aren't as good as they were in the days of the 9" rear ends and 302/351/460 pushrod engines, but they are still well built cars.

One example of a well built American small car was the Dodge Omni/Plymouth Horizon. It was very similar to the VW Rabbit and was quite durable. But their resale value was terrible and most were poorly maintained.

Ford actually did a surprisingly good job on the Pinto in a lot of ways. It had excellent OHC four cylinder engines, usually, and a rack and pinion front end both of which are still used in various race cars and street rods. Its only issue was that it occasionally exploded when rear ended. "Other than that, Mr DiMaggio, was '62 a good year for you?"

Gentlemen, let us stop using the term "SWPL" illogically to refer to people instead of things ("Stuff White People Like"). A couple of pedants before me have failed to convinced Steve of the error of his ways, and the rest of us continue to follow him like the good cultists that we are. The time is ripe for a mutiny, however.

I thought Detroit was actually in trouble because when gas was $4 per gallon, people were buying smaller and more economical Japanese cars?

That was the SWPLs who were doing that, like buying Priuses like crazy regardless of the environmental cost of those batteries and now they must be really pissed that the price of gas is so low and looks to stay low for years and a $7,000 battery replacement is looming, and no one would offer them a good trade-in on a car that needs $7,000 of repairs."

That's not true. Plenty of ordinary non-SWPL people decided to buy smaller, more fuel-efficient cars, if they had to buy one now anyway. Yeah, nobody buys a Prius as anything other than a lifestyle statement, but a regular albeit more efficient internal combustion engine car, sure.

The idea Steve proposes here is one of his few bad ones. Gas is going to get more expensive again, and the long term trend is for it to get ever more expensive. Few people realize just how unique a resource fossil fuels, especially petroleum, really are.

If the big three want to survive, they can't go on catering to a consumer demand which is not sustainable, and hence will not be sustained.

Price controls and the like are very bad ideas, or so I've always been told.

Nevertheless, these wild fluctuations are psychologically and economically traumatic for the public. It's reasonable to expect some price swings in any resource, but how are individuals and businesses supposed to make rational decisions when fuel costs could be treble what they are now in less than a year. Or half ...

Is there a way to cushion this? I hate to sound like a whiteRperson, but high gas prices are not such a terrible thing if people and businesses have time to adapt. Perhaps the answer is a high but variable gas tax. Right now, it would be around $2/gallon, to be put in a fund to support energy independence in all its green and non-green (brown?) forms. If prices shoot up again, the tax would be reduced step-wise - enough to cushion the blow but not enough to shield consumers completely, since it's important that some degree of market economics continue to apply.

Perhaps that's an impractical idea, but oil and gas are so vital to our economy that we need a way to prevent these shocks from being so, uh, shocking.

P.S. What would be really great would explanations to the public that make sense to educated non-economists. When prices shot up we were told they had gone up because of "peak oil" and "demand in India and China" and would never, ever, ever come back down below $2/gallon. No siree, never again.

So what happened? Did the peak turn out to be merely a foothill? Worldwide economic slowdown surely reduced demand but not to less than 50% of what it was five months ago.

You are wrong. Obama’s car was a Chrysler 300 Hemi V-8. After he gave a speech denouncing Detroit for making gas guzzlers, he traded that car in for a Ford Hybrid Escape SUV. I think when Obama began the campaign he didn’t think he could win, so he did stupid and dishonest stuff like that Detroit speech, but the media covered for him so he got away with it.

I'm curious. Why can't Detroit make a profit on small cars? Aren't the foreign companies that make compacts earning a profit on them?

Detroit already makes European cars - in Europe.

With globalized production and standardized components it should be easy enough to start production of these European models in North America. Maybe there are good reasons why this doesnt happen. Im pretty sure there are already overlaps between Ford & GMs US and European product ranges.

Oil pruduction from existing wells is going down by 5% per year according to the IEA. Oil discuveries peaked around 1970. Peak oil is inevitable, and gas prices will go back up. The way to save GM is to subsidize the cobalt and the Malibu this year, and really subsidize the Volt when it comes out. At the other end, apply high tariffs to foreign manufactured vehicles that get less than 25 mpg, giving the domestics all of that declining market, for now.

1) Ford and GM already make small European type cars in Europe, and they are known to be good cars. So it’s easy for them to replicate an assembly line in Detroit if they wanted to and if that were the answer to this mess. Most probably US consumers don't want to sit in matchboxes whilst cruising those endless stretches of road. And I can understand that. My impression of Detroit is that the UAW has the place bottled up. And nobody xcept a few firebrand Republicans wants to touch that situation.

2) Environmentalism actually hurts the environment. Hans-Werner Sinn, the chief economist in Germany, pointed out that the oil is going to be consumed regardless who buys it. If Europeans push clean energy, they make the mullahs nervous so these try and sell off their oil earlier at lower prices than they could get later when exploration costs are factored in. That means more oil is being consumed up front which burdens the environment even more.

3) The only reason to go green is to get the mullahs off our backs. But for that to work we need to have a serious open discussion about it and not via the cheesy proxy of wanting to "save the planet".

The way to save GM is to subsidize the cobalt and the Malibu this year, and really subsidize the Volt when it comes out. At the other end, apply high tariffs to foreign manufactured vehicles that get less than 25 mpg, giving the domestics all of that declining market, for now.

Yep, the next step in the campaign to save Dee-troit will be protectionism and tariffs.

...

In regard to little cars versus big ones: Americans like 'em big as long as gas is affordable.

People are conditioned to pay more for a big ride than for a small one.

However, it doesn't cost half as much to make a four cylinder engine as a V-8. Likewise for the transmission, brake system, air conditioner, and air bags. The point is, large vehicles are more profitable than small ones, whether the thing is made in North A. or East Asia or Yurp.

"But for that to work we need to have a serious open discussion about it and not via the cheesy proxy of wanting to "save the planet"."

Never gonna happen, at least not in the US. Here, environmentalism is all about screwing regular working and middle class white Americans while morally and socially preening, not about the actual environment. Remember, the windmills won't be built off Cape Cod, as that would ruin the view!

Very sound and specific policy notions. However gowernment programs are seldom inacted because they make sense.

For example, a dozen years ago I thought the federal government should promote and mandate the metric system. We know that this is the sort of thing a government can do. We know that because so many governments have already done so.

At that time Bill Clinton proposed to spend government money and prestige to promote love and understanding - mainly by omoting white guilt, as I remember. Interracial understanding is the sort of thing that government does very badly. To no one's surprise the Clinton initiative for racial understanding did not succeed.

What has been lost is the recognition that had that same amount of effort been expended on implementing the metric system it would almost certainly have been a success.

Its not so much that government employees are lazy or government managers are stupid. Government program failure is almost totally the result of pursuing a stupid or crazy mission. There are plenty of missions that government can do. Alas seldom we do we ask the government to pursue those missions. Instead we demand that the government do the impossible or the silly.

That's why government involvement in the auto industry is just a disaster in the waiting.

The previous two Democratic presidential candidates wanted to raise gas prices and get the pubilc out of cars as much as possible. They wanted fewer cars on the road. They measured the value of proposed measures in terms of "car off the roads". For example, the adoption of Compact Flourescent Bulbs (CFB) was promoted as equivalent to taking "100,000 cars off the road".

For probably a majority of Democratic Congressmen or Senators more cars on the roads is an obvious evil. How then that when those Congress Critters get to largely run the Detroit Big Three can we reasonably expect auto production to have an upswing?

In 1974 we and Europe experienced "The Oil Shock". Carter demanded a series of measures that would reduce our dependence on foreign oil including solar, wind and renewables. Currently {2008)we get less than one tenth of one percent of our electricity generation from any kind of solar power. You would thing that after thirty five years people would cross solar off of the list. But no, solar is still very popular with political candidates even if it doesn't seem to work.

France reacted in 1974 by converting to nuclear. Today (2008)more than three quarters of French electricity comes from the atom. France stores all its nuclear waste in one room.

Yet the dominant congress critters ignore the success of nuclear and the failure of solar.

And don't get me started on corn ethanol as an auto fuel.

Obama and Congress show every evidence of being ill prepared to deal with auto industry issues. They are haunted by scientific whimsy and uncertain whether to use this opportunity to save the auto industry or to finish it off.

Obama knows his true base, the Judeo-SWPL'ers. These people all made killings off securitized subprime MBOs and the rest of the toxic waste investment products of the last 20 years.

Their next grand rip-off is securitizing carbon dioxide emissions. They see another golden river flowing into their pockets from the Global Warming scam. It plays to their strengths. These are mendacious moralizing and talking. And it avoids their weakness, which is their inability to create anything of material value.

This is why they don't care if China, India or anyone else goes along with their global warming nonsense. And it's also why they demonize as evil anyone who gets in their way.

iow, it's the Judeo-Parisitic class' plan to keep doing what they've always done: subsist on Flyover Country while demonizing the victims as evil racists.

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